Daily Clueless Musings 6/28..Final count down to the Greek austerity plan vote

Risky assets continue to rally before Greece voting on their austerity plan. Market priced in a high probability that the vote will pass, although the protests shown on CNBC reminds everyone that passing the austerity plan has nothing to do with executing it, as Greece already failed to do so on the austerity plan they passed just a year ago. EU/ECB still does not have a clear plan to solve the Greek insolvency, but they learned to just toss an idea around the market and then stick to it, if market seems to be happy. As market rallied after French banks agreed to roll over their debt. Reuters reported that German banks agree in principle to adopt the same plan, although it still does not prevent private investors holding out of the soft restructure. Market again ignored bad economic data from US. The consumer confidence declined 3.2 points in June to 58.5, reaching its lowest level since last November. The labor market differential reported in the Conference Board data widened from -37.8 to -38.6 in June. The 5 year auction is a horrible 3.5 bps tail off the market. The bid To Cover coming at 2.59 a plunge from May's 3.20, and the lowest since June 2010. Indirect interest evaporated once again, tumbling from 47.1% to just 37.6%. As QE2 is about to end, dealers can no longer flip their treasuries to Fed for a quick buck. The real demand for US treasuries may not be as strong as the previous auctions had shown. The demand is likely to be much weaker, if Europe is not in the middle of credit/currency crisis. Futures traded lower on the second day in a row. The downward movement is pretty violent. There was no more buying the dip trade, as we saw in previous selloffs. Gamma options are relatively weaker than the vega options, as market is sure that the can will be kicked down the road.